The story contains the anecdote of a planner in League City,Texas, whose political ingenuity convinces elected city officials to approve “comprehensive plans limiting new development near wetlands and in flood plains that might be threatened in the future” and “it restricts development in places likely to flood.”

For taxpayers, the question is why are people building homes on flood plains and hurricane-prone land to begin with. The answer is simple – it is the direct consequence of government policies, the very government now scrambling to protect us from the policy they helped push.

Since it was established in 1968, the National Flood Insurance Program (NFIP) has made more homes susceptible to hurricane and flood destruction. The program allows property owners in participating communities to purchase insurance protection from the government against losses from flooding. Before the program, there was considerably less development in flood and hurricane prone areas.Not surprisingly, when the government decided to insure homes that the private sector wouldn’t, development in disaster-prone areas increased.

Residents of League City, the Galveston County town of 83,000 portrayed in the story, have filed over 3,000 NFIP claims worth over $41 million.

Nationally, the government flood insurance program has paid nearly $39 billion in claims since 1978. As of 2010, the program was $20 billion in the hole and only collecting $2 billion in premiums each year.That didn’t stop the supposedly fiscally conservative Republican-controlled House from overwhelmingly approving the program (406-22, with basically a portion of the Tea Party caucus voting “no”) in July for an additional five years.

The program not only incentivizes people to build their homes in perpetually disaster-prone areas, it pays them to do it twice.“Repetitive Loss” homes – those who have been damaged and repaired more than once – currently only make up about one-percent of total homes in the program, yet they draw down 40 percent of the total claims in the program.

The government would be wise to leave housing insurance to the private sector and let those who wish to build a house on a flood plain weigh their costs and consequences of that decision against available options in insurance industry, which doesn’t have the luxury of printing money.